New grocer revealed for College Terrace Centre

Neighbors worry that close ties between grocery firm, development company could cause problems

The former site of JJ&F Market and The Futon Shop will be developed into office buildings. Photo taken January 30, 2014 by Veronica Weber.

A lease approved by Palo Alto officials for a new family market at the College Terrace Centre on El Camino Real shows that the new grocer is the son of the developer and a principal partner in the development company.

James Smailey has formed a corporation, J & A Family Markets, Inc., to run the grocery store, which will replace the former JJ&F Market. The corporation was registered on Aug. 23, 2013, according to the California Secretary of State.

Speculation about which grocer would take the place of the 65-year-old, family-owned JJ&F has abounded for years, ever since the Garcia family sold its market at 521 College Ave. in 2010. The whole block at the corner of College and El Camino Real has been slated for redevelopment since 2009. The project will result in 38,980 square feet of office space, an 8,000-square-foot grocery store, 5,580 square feet of other retail space and eight low-rent apartments.

Smailey is assembling a team of four people who have a combined experience of more than 100 years in the grocery business, said his father, developer Patrick Smailey. James Smailey is still formulating a plan, and he will be meeting with city staff next week to provide an update.

Patrick Smailey said having one of the partners in the development business, Adventera/Twenty-One Hundred Ventures, run the grocery store was an option they started considering two years ago. He has always planned to follow through with the kind of grocery store that would honor the Garcia family's legacy, and operating their own grocery with a staff of experienced grocers on board could provide more control over quality, he said.

"It was always our plan and goal to at least match, if not exceed, what was there before. I personally think the grocery will be really viable here. It will have exposure to El Camino Real, and we have given it the best corner on the block. It should be a home run for everybody  the residents, the store and the neighborhood," he told the Weekly.

But some neighbors of the development aren't so sure. One of the terms of the development's approval was that the new grocery store would be comparable to JJ&F.

"Do they have experience operating a grocery store?" Doria Summa of the College Terrace Residents Association wrote in an email Wednesday. "Can they provide something 'comparable' to the multi-generational family-owned business that the Garcia family operated for over 60 years?"

Another stipulation in the city's approval of the new development was that the signed lease must be enforceable against the tenant.

"Does one really expect us to believe that the landlord, the father, will enforce a lease agreement against his son and co-partner?" resident Fred Balin asked. "Here we have a situation where the city needs to explain how this lease meets the stipulations for the market."

Referring to the zoning that the city granted the development, known as "planned community" (PC) zoning, Balin added: "(Enforcement) is one of the major things people complained about with PCs. It's something the council tried to tighten up, specifically in this process."

Planned-community projects have become increasingly controversial in recent years, as developers are allowed to build more densely in exchange for giving the city and residents "public benefits," such as parks, plazas, affordable housing and community centers.

However, opponents of PC zones say that many of those promises have not materialized or have been lost as the city has allowed, for example, public spaces to become outdoor seating for restaurants.

While the Smaileys said they had initially intended for the JJ&F Market to return to the new development, the Garcias do not plan to reopen the market, Patrick Smailey said. The subsequent market operators, the Khoury family, expressed interest in relocating to the new space, but they did not submit a formal proposal, Smailey said. Family member Ronnie Khoury said in August 2013 they were not approached to occupy the new market space. They received a 30-day eviction notice and closed the store in mid-September. A source close to the family said this week they would not return.

Russ Reich, a senior planner for the city, said the College Terrace Centre's PC ordinance requires the city to sign off on the grocery store lease and the tenant. The city's legal team approved the form of the lease on Dec. 8, but the city has not yet approved J & A Family Markets as the tenant.

The city has the option to not approve a tenant, but only if city staff reasonably finds the tenant is not likely to be comparable in quality of products and service as JJ&F.

Staff has requested the Smaileys provide the city with a business and marketing plan for the grocery store, and the city will review the plans prior to making a decision on the tenant. Before any office tenants can move in, the grocery tenant must begin operations, Reich added.

Meanwhile, construction may move forward, he said.

Demolition and construction is planned to begin this spring. The company announced in February it had secured funding through Canyon Capital Realty Advisors. Completion of the development is scheduled for August 2015.

Comments

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Posted by Midtown
a resident of Midtown
on Mar 14, 2014 at 10:16 am

Is this another Miki's about to happen, only this time it smells like the developer is directly gaming the system. We shall see.

Posted by anon
a resident of Evergreen Park
on Mar 14, 2014 at 10:45 am

I agree with Midtown. Also what does this statement mean: "The city's legal team approved the form of the lease on Dec. 8, but the city has not yet approved J & A Family Markets as the tenant."

???? why didn't the developer try to get the other grocer to come back? They had been there quite a while? Hmmmmm…

If the city is not very careful we could end up with a mikes or worse. with the conflict of the developer being the grocery operator they may not care in the end if the grocer store i viable just keep it limping along while the office space rakes in the money. The would be technically in compliance but the benefit to neighbors vanished.

I think this is a great idea. If the owner/developer of the site has a share of the grocery store and the store doesn't make money, the office space at the site can subsidize the store. It's all one deep pocket. The store doesn't have to make money independently.

Posted by Resident
a resident of Another Palo Alto neighborhood
on Mar 14, 2014 at 1:03 pm

This is a joke, right?

A developer's son and a few of his buddies are looking into what it takes to open a grocery store! No experience! No business plan! Is this because nobody else wanted to attempt to make a go of it, or is it just plain nepotism?

Posted by curmudgeon
a resident of Downtown North
on Mar 14, 2014 at 2:09 pm

Gang, the plain truth is that the residents of College Terrace and our fair city have been snookered. Again.

The developer needed to show a lease for the grocery store before the city would issue a building permit for the project. OK, now he gets his permit. Then the kid breaks revokes the lease, dad penalizes him a few bucks, and builds offices in that space. You can be sure that the city ordinance which created that PC zoning has no enforcement clause to penalize the developer if the required grocery store never actually happens. That's simply the nature of the Palo Alto PC process: a one-sided giveaway.

Posted by Allen Edwards
a resident of Old Palo Alto
on Mar 14, 2014 at 3:15 pm

No way this should be approved. Smells. I can just see it, the building gets built and the son never had any intention of opening the store. There is a hole in the lease that the city missed and poof. Another high profit building gets built in violation of the zoning and the city gets screwed.

Posted by Berry
a resident of College Terrace
on Mar 14, 2014 at 4:17 pm

Jesus H PA City Council! You fail big time with new housing code inspections (my neighbors house has violated endless codes that the city overlooked or approved without reviewing). You fail to review or cover the details in this development that is unfolding. I don't know of anything positive or good that you people do! Get it together PACC. You're driving this town into the ground. STOP with the housing developments! Stop with the profitable Developers getting zoning breaks!

Posted by Annette
a resident of College Terrace
on Mar 14, 2014 at 7:11 pm

When City staff is comparing the proposed new grocer to JJ&F I hope they will compare it to the years in which JJ&F was thriving and not the last few when the space was in need of improvements and uncertainty dominated decisions. The City and the developer have a clear obligation to get this right and honor the deal that was struck. Obviously time will tell.

Posted by Joan
a resident of College Terrace
on Mar 14, 2014 at 7:23 pm

Why would anyone trust this developer. When he was first discussing his plans years ago, we, in College Terrace, could see he would say anything to go ahead. He was dishonest is so much of what he stated---like leaving JJ & F open, etc. And it's very hard to imagine enforcing the lease on his son, who has never been in the grocery business. If he suggested anyone else who had never done this before, it would never been approved. The city council must be wearing out their rubber stamps since that's all they do. Shame on Palo Alto!

Posted by ChrisC
a resident of College Terrace
on Mar 15, 2014 at 1:17 pmChrisC is a registered user.

I live in College Terrace and did the bulk of my shopping at JJ&F before the Garcias sold it. However, most, if not the majority, of the College Terrace residents, who testified at City Hall and are probably now whining over what they want at the corner did only convenience shopping there. A survey was distributed . way back.. by CTRA, I believe, and the question missing was how much shopping do you really do there? How much per month do you spend at JJ&F? I really hold no faith that College Terrace residents will do their shopping at anything new to come in there except a glorified 7-11. Trader Joe's put the final nail in the Garcia's business as the proximity to College Terrace lured people by the droves to TJs. So, any of you starting to whine about what kind of store comes in here, please also include how much you intend to spend there.

Chris is right about all the people who, manipulated by Patrick Smailey who used the bait of the continuation of JJ&F, wrote and came in droves to city hall to testify in support of JJ&F, and tell the council to approve the PC. The irony is few did much of their grocery shopping there, if they ever did, and certainly not after Whole Foods and then Trader Joe opened in Palo Alto.

Yet, anyone who was really interested would have known that from the beginning Patrick Smailey was working to get rid of the Garcias. He filed a lawsuit against the Garcias with the goal of evicting them, which the Garcias had to settle out of court (not having deep enough pockets to fight it), and as part of the terms they had to sign a non-disclosure clause.

Originally, in a bid to get a PC approved, some will remember Patrick Smailey claimed that JJ&F could stay in business during construction, with minimal closure,as he would be building in phases to accommodate them. Yet behind the scenes he was planning to remove any parking so the store would go quietly under and disappear. When it became clear that Patrick Smailey wouldn't get a PC without the market, he dangled the bait of the new store as the public benefit. We all know how that turned out. Then the Khouris were given to understand they might be able to apply to run the new "public benefit" market, yet were summarily evicted with 30 days notice.

All Patrick Smailey and his son, James Smailey, have to do has to do is have a market up and running just long enough to get the new building occupied.

The "public benefit" market at Alma Plaza is the perfect model for the end game here. Encourage a grocer with a sweetheart deal to open for business just long enough to get the development occupied.

What then happens to the "public benefit" market is immaterial. The money is in getting the rest of the building(s) occupied. Any loss on the "public benefit" is just the cost of doing business. What's the planning department going to do? We all know what their track record is for monitoring "public benefits" once a developer has extracted the additional tens of thousands of square feet of building from the city.

The "public benefit" market at Alma Plaza is the perfect example of what is going to happen here.

For those who don't know, having a signed lease is a condition of the building permit to begin construction. It is also a condition that occupancy that the market be up and running before any of the buildings can be occupied.

Posted by curmudgeon
a resident of Downtown North
on Mar 15, 2014 at 9:01 pm

"We all know what their track record is for monitoring "public benefits" once a developer has extracted the additional tens of thousands of square feet of building from the city."

Yes. The city is powerless. It has giddily eviscerated its authority.

"the market [must] be up and running before any of the buildings can be occupied."

But happens if the market doesn't happen? Once you have a PC, the usual zoning code enforcement is superseded by the PC grant ordinance. Therefore: What specific enforcement/penalty process does that ordinance have in this case?

Posted by Laurel
a resident of Adobe-Meadow
on Mar 15, 2014 at 9:12 pm

Any [portion removed], had PA city council bother to do any thinking about this, would have realized that this 'deal' stunk to high heaven. But, since this is a Planned Community, the city council will bend waaaaay over to ensure that the developer gets all the profits they Planned from the local Community.

Another beacon of astonishing stupidity, brought to you by the city of Palo Alto, the developers they adore, and their beloved Planned Communities.

Posted by Garrett
a resident of another community
on Mar 16, 2014 at 11:16 am

I don't how these little neighborhood markets even stay in businesses against the major super markets and big box stores. Yes they could open store, fund it and hire someone with a grocery store background. It is not like this little store will be major player or compete against the Trader Joe's, Wal Marts and Safeway's of the area.

Posted by Ignore the man behind the CT curtain
a resident of College Terrace
on Mar 16, 2014 at 12:52 pm

[Portion removed.] There are many reasons why we have BMR units and suffice to,say they are done for the good of the community. Plus people do pay rent for these units. The people that rent them do work and contribute to society.

Posted by Trevor
a resident of College Terrace
on Mar 16, 2014 at 3:26 pm

I lived a few dozen yards from JJ&F and almost never shopped there - it was dirty and while friendly, not very appealing. I would usually take the wake to Molly Stone's.

A lot of the above negative comments are really B.S.; why do they even care - I think they just like to bark and get the feel of control over developers. It wouldn't happen like this in most other cities.

If a grocery store goes in there, which I presume it must, I am sure that it will be done well and admirably, whoever is whining is just childish. Get a life. Palo Alto needs new upscale development to support its over-the-top atmosphere. If anything smells, it's the neighbors and the dictators at city hall.

Posted by Fred Balin
a resident of College Terrace
on Mar 16, 2014 at 10:12 pmFred Balin is a registered user.

FYI.
Below is the list of the "special limitations" detailed on Page 4 of the PC ordinance #5069 for this project, available at Web Link

(b) Special limitations on land uses include the following:
(1) A grocery store, with an area of at least 8,000 square feet, shall exist within the development for the useful life of the improvements;
(2) The grocery store shall be a neighborhood serving grocery store that provides all the typical grocery store products and services of a neighborhood serving store such that it shall not become a convenience mart facility;
(3) A signed lease for the grocery store, enforceable against the tenant and approved by the City Attorney, shall be submitted prior to issuance of any building permits on the site.
(4) The grocery tenant shall occupy and begin operations prior to any office tenant occupancy.
(5) The below-market rate housing shall be occupied not later than 120 days after the first occupancy of the office building. No more than 50% of the office space shall be occupied prior to occupancy of the housing.
(6) The grocery tenant, if it is a party other than John Garcia (DBA JJ&F), shall be subject to the prior approval of the City of Palo Alto and shall not be withheld unless the City reasonably finds that such proposed grocery tenant is not likely to be comparable in quality of products and service as JJ&F as it existed and operated on December 7, 2009.
(7) The grocery store space shall remain in continuous operation as a grocery store. "Continuous shall be defined to include brief closure for ordinary business purposes."
(8) No medical office shall be permitted within the development;
(9) The office uses within the project shall not exceed 38,980 square feet;
(10) The 5,580 square feet of area designated as "Other Retail" on the development plan shall not be converted to ground floor office space; and
(11) The "Other Retail" space may be occupied by retail uses, personal service use, or eating and drinking services only.
(12) Use of the outdoor market area as shown on the project plans as being 2,447 square feet shall be limited to an open air market for grocery related uses only.

Posted by Craig Laughton
a resident of College Terrace
on Mar 17, 2014 at 3:34 pmCraig Laughton is a registered user.

>Correct.
One of the major flaws in PCs.

Fred,

The major flaw of PC zoning is that it allows interest groups to deny existing zoning, and to create whatever the flavor of the day is A camel is a horse designed by committee. This is how we lost that public plaza to welfare housing. Enforcement is of a lesser concern, although still real.

Posted by Fred Balin
a resident of College Terrace
on Mar 18, 2014 at 7:58 amFred Balin is a registered user.

By "interest groups" I assume you mean developers, Craig.

In their first preliminary review before the planning commission, the developer included a small park. In return, he would change the neighborhood commercial zoning into a PC for a regional office complex. The neighborhood did not like the idea. So in a second preliminary review, he swapped out the park for below market rate housing thinking that would be a better lure for commissioners and the council. Again the public was not excited. Then he made minor changes and brought it back again to the planning commission for a third and formal review. It was rejected.

By then, however, he had hired a PR firm, and The Big Game was underway. First they made headlines by publicly bashed the the commission ("A Theatre of the Absurd"), then they unleashed the devilishly brilliant "Save JJ&F" campaign: Time was running out: JJ&F couldn't succeed without a new store as soon as possible, he would deliver it and "save JJ&F" but only if his PC was granted, and granted as proposed.

Naive friends of JJ&F signed on. The council caved, overruled the planning commission, and approved the PC. They did tighten up the conditions for the market, but as has been pointed out, there are no specific enforcement provisions after a lease is approved.

Of course, the urgency to save JJ&F evaporated once the PC was approved.

Staff needs to stop this charade now. Demand a proper lease signed by an experienced grocer, someone who is not a relative of those who control this property, and make sure all the other conditions of the PC are met.

The city council has shown repeatedly, it can not say no to PCs, nor has the council ever written in effective enforcement conditions and penalties to protect the public benefits in a PC ordinance.

City Staff has repeatedly shown they do not enforce the requirements to both include and keep the public benefits in completed PC projects.

Yes, enforcement is a secondary concern. The primary one is that there is very serious doubt in this community that Palo Alto is grown up enough to be allowed to play with PCs at all.

Posted by Craig Laughton
a resident of College Terrace
on Mar 18, 2014 at 5:41 pmCraig Laughton is a registered user.

>there is very serious doubt in this community that Palo Alto is grown up enough to be allowed to play with PCs at all.

I agree, depending on the circumstances.

> By "interest groups" I assume you mean developers, Craig.

No/yes, I mean the interest groups, like the welfare housing lobby, that get involved in PC projects, and push them through. The developers lobby them, because they understand that Palo Alto is nearly reflexive in approving such housing (> So in a second preliminary review, he swapped out the park for below market rate housing thinking that would be a better lure for commissioners and the council)....the developers don't need to live with it, so no skin off their back. In this particular project we gave up a plaza/park in favor of 8 welfare units...even then, the welfare lobby screamed bloody murder, because they wanted even more units.

When will CT, finally, stand up against the welfare housing lobby, Fred? At this point, we are getting dumped on. Unless there is a secret ballot/survey, we will continue to get dumped on. Do you support a secret ballot/survey, Fred?

Posted by Fred Balin
a resident of College Terrace
on Mar 18, 2014 at 9:37 pmFred Balin is a registered user.

I though this article and thread was about PCs, Craig. However ...

… at some point we can talk about Palo Alto's inclusionary zoning ordinance and the lawsuits challenging it; the State's Density Bonus law and Palo Alto's mandated implementation, which provides exceptions to development standards for below market rate units; and ABAG's requirements throughout the Bay Area, including built-out Palo Alto, for the zoning of large numbers of housing units that must be apportioned among various income levels (i.e., that includes low incoming housing), but ….

…for the last several weeks myself and many other College Terrace residents have been using every available minute engrossed in encouraging Stanford to do something meaningful about the dangerous construction traffic and excessive post-construction residential traffic that will hit College Terrace via the 2005 Mayfield Development Agreement that will bring 250 homes next to College Terrace.

I see you supported the recent residents' petition to Stanford; thank you.

But in 2005, you spoke emphatically, personally, and I would add, effectively, in front of the city council for them to approve the project. You wanted those soccer fields.

But just one more vote on the other side on the council dais that evening would have compelled Stanford to make at least some adjustments on traffic and you were not with hundreds of CT residents on that one. But that is your right, and that's OK.

The deal was for soccer fields immediately and then, years later, 250 units of housing, … INCLUDING UP TO 70 UNITS OF BELOW MARKET RATE UNITS on at least 1.8 acres on El Camino Real between Bank of America and Wells Fargo.

All 70 below marker rate units will be built.

Will you come to the ARB this Thursday morning when the market rate housing is discussed and/or two Thursdays from then when the El Camino Real below market rate housing units are discussed, both possibly for the last time before demolition and construction and state publicly that you were wrong, and that the "welfare housing" that Stanford is going to construct and that you supported to get the soccer fields should be scrapped?

Posted by Craig Laughton
a resident of College Terrace
on Mar 19, 2014 at 1:26 pmCraig Laughton is a registered user.

>I though this article and thread was about PCs, Craig.

I thought so, too, Fred. Do you fail to understand that the welfare housing lobby is perhaps the biggest driver of PC exemptions? I found that out in 2005, when, as you correctly state, I favored the Mayfield deal. It was a three-legged stool, and I supported two legs: Playing fields and the development on the old Syntex site (to become VMware). Jim Burch, the Mayor at the time chimed in with his welfare housing pitch, although I was a tad naïve at the time...I thought he was only part of the mix...took me a while to figure that he and his crowd were the driving force, from the PA side.

I still support that Mayfield deal, on balance. However, there is no need to allow the welfare lobby to continue forward in CT (e.g JJ&F block and the homeless center at the church).

A simple secret vote in CT would be informative, Fred. Do you agree? If so, and when the vote is at issue, I will agree to show up at a couple of political theatre events....could be a real zoo!